Post‐NAFTA production and sourcing development in the maquiladora program

The maquiladora program is an important part of the economy in North America. A significant share of intra‐industry trade has been generated between the USA and Mexico. The imports and exports from maquiladoras to the USA continue to grow under NAFTA. However, non‐maquiladora sectors are growing at a faster pace. Non‐US foreign direct investment, particularly from Asian and European companies, is a current trend in maquiladoras. A cluster concept is now developed among new maquiladoras from Asia and Europe to remain competitive in an increasingly price‐sensitive market, to maintain consistent quality standards in a high‐volume environment, and to fulfill the NAFTA’s rules of origin provision. Maquiladora production is now shifting from lower‐skilled, labor‐intensive assembly to advanced production technologies. Obstacles still remain in Mexico’s infrastructure and regulations to its market. There are some debates on the future of maquiladoras after January 1, 2001, the theoretical expiration date of maquiladoras. However, the complementarity of the US and Mexican economies should nonetheless sustain incentives for production sharing and sourcing.